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2 cool money tricks: Hourly to salary calculator and the rule of 72

Two really useful personal finance tricks — a super simple formula for changing hourly to salary and the best way to see how long it’ll take your money to double.

Ramit Sethi

I think everyone can agree: Getting paid for your hard work is AWESOME.

But it doesn’t matter if you’re an entrepreneur or if you’re working for someone else, you’re probably going to be asking yourself a LOT of questions:

  • How much am I being paid per hour?
  • How do I calculate my pay from hourly to salary?
  • How long will it take me to make X% more?
  • How much should I expect for payment?

That’s why I wanted to share with you two cool back-of-the-napkin tricks that I use to help me answer some of these questions quickly so I’m not wasting a bunch of time.

You can even do these tricks at parties and impress everyone with your awesome personal finance tricks!*

I mean, what’s cooler than personal finance?

*Results from this claim may vary.

Bonus: If you’re new to investing, this might be all Greek to you — which is why I wrote a huge free guide to personal finance that goes into even more detail on the strategies described here.

Cool financial trick #1: Find out your yearly salary using your hourly rate

The formula to convert hourly to salary

This one’s simple: just take your hourly rate, double it, and add a thousand to the end.

So if you make $20/hour, you make approximately $40,000/year. ($20 x 2 = 40. Add 000 to the end for $40,000.)

If you make $30/hour, you make approximately $60,000/year.

Working backwards, $50,000 a year is $25 an hour ($50,000/1,000 = $50. 50/2 = $25!)

This can also work in the reverse if you want to find out your hourly rate. Simply divide by two and drop the thousand.

So $50,000/year becomes approximately $25/hour.

Of course, this is based on the typical 40-hour workweek and doesn’t include taxes.

Why this trick is great

For two reasons:

One, sometimes you have an hourly job and need to compare it to a salaried one (or vice versa) while applying to possible jobs.

Two: When you’re a beginner freelancer and you really don’t know how much to charge, this can help. Use Google or Glassdoor to find out the salary a full time person would earn – then convert it to hourly to figure out what you should charge. Once you’re established, you should charge way more because you’re worth it.

I often get questions like:

  • “How much should I charge?”
  • “Is $XX/hour too much or too little?”
  • “Should I be charging by the hour or by the project?”

By looking at your ideal (read: realistic) salary, you’ll be able to figure out how much you should be charging per hour quickly and easily.

If you’re still wondering how much you should be charging, here are two other great methods I’ve used to find a rate that’s good for me.

That’s right. You get three tricks for the price of one. Consider yourself LUCKY.

  1. Double your “resentment number”

    I love this one because it’s both really interesting and effective. Ask yourself: What’s the lowest rate you’ll work for that’ll leave you resentful of your work?Say you’ll work for $15/hour at the VERY LEAST but hate the job. Just double that number so now you’ll earn $30/hour.

  2. Do what the next guy does

    This method is incredibly simple: Go to Google and search for the average hourly rate for whatever service you’re providing. You’ll get a good sense of where to start when you’re charging your clients.

And after you earn your first $1,000, it’s incredibly easy to start dialing your prices up and “tuning” your rate.

Were you making $30/hour? Start charging $40 or even $50. There’s no hard and set rule for how much you should be charging.

Cool financial trick #2: Use the rule of 72 to see how long it’ll take to double your money

The formula

Simply take 72 and divide it by your return rate percentage. The result is the number of years it takes to double your money.

When you put it together, it looks like this:

72 / [ return rate you’re getting] = # of years to double your money.

Imagine you’re getting a 10% interest rate from an index fund.

Divide 72 by 10, and you have approximately 7 years to double your money.

So if you invested $5000 today, and earned a 10% return, you’d have $10,000 in 7 years.

Of course, it doubles from there too. In other words, as long as the return rate is constant, the money will double every 7 years.

Why this trick is great

With the rule of 72, you can see how easy it is to DOUBLE your investment by investing just a little bit of money.

To give you an example of how much money you can earn this way, I’ll tell you about when I put away $1000 in an index fund as a gift to my friend’s new baby.

Yes, I know. I’m such a sentimentalist.

Assuming the index fund earns 10% annualized during the kid’s life, guess how much it would be worth?

Age 1: $1,000

Age 7: $2,000

Age 14: $4,000

Age 21: $8,000 (This is where I come in and tell her not to spend it all on her spring break trip to Cabo.)

Age 28: $16,000 

Age 35: $32,000

Age 42: $64,000

Age 49: $128,000

Age 56: $256,000

Age 63: $512,000

Basically, you can see that Uncle Ramit’s $1,000 gift would leave the kid rolling in money 60 years later.

As singer-songwriter and greatest-poet-of-this-generation-and-the-next Celine Dion once said, “My heart will go on.”

And it grows from there. Note how much the money grows towards the end.

Yes, this is a simplistic model that assumes a 10% return rate. And yes, it leaves out inflation/taxes.

BUT it shows that even a small investment of $1,000 can grow with time — even though you don’t add a penny to it.

The critical factors are time, minimizing fees/taxes, and picking sensible, long-term investments.

So the question is now: What are you going to do about this? Are you going to keep your money sitting in a bank account where it’s NOT making appreciable returns, or are you going to start investing that money?

The sooner you start, the easier it is to get rich.

This isn’t BS either. There’s over 100 years of evidence in the stock market that suggests this.

Still don’t believe me? Let’s look at another real world example.

Say you’re 25 years old and you decide to invest $500/month in a low-cost, diversified index fund. If you do that until you’re 60, how much money do you think you’d have?

Take a look:

pasted image 012
$1,116,612.89.

That’s right. You’d be a millionaire after only investing a few thousand dollars per year.

Notice, I’m not talking about the Hollywood type of investing where hot-shot stock brokers make huge multi-million dollar trades while yelling “SELL” into a phone for some reason.

I said you should invest in low-cost, diversified index funds over time. That’s because smart investments are about consistency more than anything else — not chasing hot stocks. Or other weird investments:

By using these two tricks, you’ll be able to really get started on your journey to live a Rich Life. Use the hourly to salary trick to figure out how much to charge so you can invest in an index fund. Then use the rule of 72 to figure out when that index fund sets you up for retirement.

If you want more tips like the two in this article, I’d love if you joined my FREE private email list.

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56 Comments

  1. Dylan

    I like the Rule of 72 to put inflation into perspective. If you assume 3%, 24 years from now (roughly the amount of time between generations) living will cost twice as much.

  2. Roman

    Inflation doesn’t matter in this calculation. Just use the real (taking inflation into account) rate of return for your investments. That way you’re walking about the buying power of your money instead of an arbitrary numeric value.

  3. Stormy

    To add inflation to the Rule of 72 just subtract the amount of inflation from the interest rate. So if you expect inflation to be 3% and your interest rate is 10%, you just use 7%. So in the above example, taking inflation into consideration, your money would double in 72/7= 10 years instead of the 7 that was predicted.

  4. James

    Roman,

    Dylan was using the rule of 72 in a different way…instead of using it to calculate how much an investment will have grown, he was using it to calculate how much money will have inflated.

    It works on exactly the same principle, and I think is interesting to note that, on average, in 24 years everything will cost twice as much due to inflation.

  5. Willie

    Neat tricks. Great for small talks at the dinner table. It completely baffles the mathematic wiz when I make that kind of claim without the proper proof. It’s amusing to see him working out the math in his head.

  6. Finance Findings For Monday, March 12, 2007

    […] 2 cool tricks to use: Your hourly rate and The Rule of 72. [I Will Teach You To Be Rich] […]

  7. JW

    If you believe in the whole “Siegel’s Constant” thing, you can expect real (inflation-adjusted) returns on that index fund to be closer to 6.5%, so maybe double the value of your future gift every 11 years instead of 7, giving her $64,000 at age 66. Not quite as impressive, but still one heck of a gift.

  8. William Nevers

    I love it, thats encouraging. Such a great gift idea thats what I’m going to do for people I know!
    What could be a better gift right?

  9. Sunil

    Ramit,

    I have to congratulate you on taking what are obvious ideas and turning them into a marketing goldmine.

    What I’m surprised is how many people value the information you provide, which is common sense at best. But common sense is sometimes the least common commodity of all.

    But I wonder if it is the 20 year olds that are splurging at Christmas the idiots, or the 20 year old Scrooge who’s advising them to cook at home, spend less and not enjoy the best years of their lives.

    I have money, more than the $2mil you just got for your book deal, but I look back at life and being somewhat older than you, realize, it’s not the money that counts, it’s the experiences.

    And by chiding young people from creating memories, even though it may not be financially wise, you are steering people into caves like your own, spending all your working hours dedicated and obsessed with making money as life passes by your best years

    Money is not everything, it is barely one piece of the puzzle. It makes life comfortable that is about it.

    You are the pied piper for this civilization, obsessed with money, using money as a measuring stick for success, happiness.

    If I come across as sour, yes, that’s probably true, because I see arrogance and a lack of humility, which really indicate much deeper issues at play inside. As a psych major, I’m sure you have far better insight

    But it does astonish me that you’ve had the advantage of superior opportunity and still find yourself focused on the one thing that will not buy you happiness

    Best of Luck, I do hope you figure it out.

    In the meantime, you continue to perpetuate and propage the emptiness of a culture slowly losing character and depth

  10. Sunil

    It’ll be interesting to see if you have the guts to post a comment that offers an opinion differing to yours

  11. Ramit Sethi

    Of course I’ll post it. I don’t understand what you’re talking about, since this site is not about materialism and buying things to seem cool. It’s about identifying your goals and working to have the resources to achieve them. Whether that’s a vacation or a scholarship, you can do it, but it takes work and planning–and knowing why you want it.

    I don’t write about blindly building up wealth. I write about the opposite: Asking yourself what’s important and working towards that. I’m a fanatic about not earning money just for the sake of earning money, and I hope you can see that in every post I write.

    I really have no idea where you got the idea that I’m obsessed about money, or that I’m encouraging people to splurge unnecessarily. I want people to enjoy their lives, plan ahead, and help their communities, and I think I’m helping to do that.

  12. eschew / links for 2007-03-12

    […] 2 cool tricks to use: Your hourly rate and The Rule of 72 (tags: money future advice tips) […]

  13. Carlin

    Apparently, if you decide to plan ahead and save money, you’re missing out on life. I never realized I had to spend every dime I make so that my life was worthwhile. Also, I believe the $2 million was venture capital money for his business, not his book deal. It’s interesting how you despise using money as a measuring stick, but you feel the urge to mention you have more than Ramit, as if it will validate what you’re about to say, give you some sort of authority. It’s also obvious you haven’t read a good portion of his posts. I see your point, but unfortunately it doesn’t apply to this site. Do some research.

  14. Nas

    Responding to Sunil’s comment.

    I live in a city that has the worst overall credit scores in the nation.

    I wish everyone here read Ramit’s site. Hell if I could, I’d post a billboard advocating capoeira-angola.ru.

    As a young, recent college graduate, I have found Ramit’s site tremendously helpful. Dealing with personal finances can be intimidating, especially to women. Ramit makes the topic approachable and uses anecdotal humor to make it fun.

    I don’t think he is steering people into caves at all. He’s creating a forum that addresses basic, important points that bring people together. He talks about simple, day to day changes that can make big differences in individuals’ lives. He advocates the importance of life balance while making modest, long term goals. Ramit introduces his readers to extraordinary people, and encourages independent thinking.

    Most importantly, what separates this site from others: He is genuine (or at least he appears to genuinely care).

    Ramit, keep on writing! I think you’ve figured it out!

  15. Sunil Sharma

    capoeira-angola.ru reminds me more of richjerk.com than it does StevePavlina.com

    If your posts are helping readers, I wish you the best.

  16. Me, myself and Money

    I think Ramit is doing an absolutely amazing job educating people about personal finance. I’ve learned a lot just by reading his posts. I don’t know what problem this Sunil guy has. But great job Ramit!!

  17. Jonathan

    Sunil, your comment was full of assumptions.

    Telling people to spend their money wisely and try to invest for the future is not hurting their college or life experiences. In fact, because I manage my money well, I can do MORE with my life than others.

  18. Ryan

    That’s really unfortunate to see comments like the one above. It is precisely Ramit’s unflappable dedication to seeing beyond the bottom line that has kept me coming back to this site. He’s repeatedly invited readers to really evaluate their goals and what to do with their money. And the post about kiva.org should be proof positive that that’s the case.

    Besides that, there are a lot of people who obsess about money. Most of them aren’t smart enough to come to this site. Most of them obsess about getting raises and change jobs based on salary rather than fulfillment. Money enslaves. This site is about making money work for you and finding a way to use improve your quality of life and the lives of those around you (whether it’s your friend’s new daughter or an business owner in Guyana).

  19. Sri

    Sunil,

    U have over US$2 million??? Give me some….i know a good way to make more 🙂

    Kiyasaki once said…if you have $25,000….the first thing you do is shut up.

  20. Blair Christopher

    Ramit,

    Never mind what Sunil as said. It is quite obvious that this person is either a new reader or just does not comprehend your advice. You pound into our heads this “sexy vs. smart” idea and honestly, it has nothing to do with materialism as this person assumes. Quite the opposite in fact.

    Be smart, calculating about your financial future and enjoy the life you live right now. That is essentially what I get from your site.

  21. S

    Thanks to Ramit, I have stopped just thinking about it and have actually done something about my investment accounts. As a result have been more at peace about my financial status than ever before.

    I am also leaving the country for two weeks on vacation because I saved the money to be able to leave the “cave” and to start “creating experiences” – experiences that will increase the depth of my character. And guess what? Ramit has helped me with that personally. (Thank you.)

    I know I’m not the only one who has been affected for the good by Ramit. I have NEVER got the impression that Ramit is about money equalling happiness, and that is why this is about the only blog I read regularly.

    Not to mention that he is willing to post negative comments to maintain his integrity as a blogger.

    Good for you Ramit, for creating this site, and for sharing it with us. Cheers.

  22. How to start a clothing line from scratch

    thats a cool little trick calculating your annual salary never heard of it …until visiting this site.

  23. Nice Rules of Thumb « The Unofficial Financial Peace Blog

    […] 13th, 2007 I Will Teach You To Be Rich has a simple and useful summary of two rules of thumb that are very useful in the personal finance world. I would highly recommend reading, […]

  24. J

    I don’t totally understand Sunil’s point or how it applies to Ramit, but I am familiar with the rhetoric. It’s easy for some people to believe that not spending money while young=not having desirable experiences and/or having an unhappy sheltered life.

    Even though there are a lot of counter examples to this logic (Peace Corps, Full Bright Scholars, etc.), it seems easy to accept based on the values we hold. I mean, the guy who parties every night HAS to be more fulfilled than the guy who sits at home reading library books, right? The guy who has the big TV and all the video games HAS to be more fulfilled than the guy who has no TV at all, right? The guy who blows money on a big steak dinner HAS to be more fulfilled than the guy who cooks himself a humble vegetarian dinner at home, right? The gal who shells it out for designer clothing and fancy gym memberships IS a lot better off than the gal makes her own clothes from thrift store cast offs and does yoga on her living room floor, right? There are those who argue that not being fulfilled in THOSE ways is psychologically freeing–but those people are quickly labeled as fringe elements and we mock them, right? Lovely downward comparison.

    But there is a lot of good non-fringey sense linking good financial habits while young to overall life fulfillment. At the moment, I’m reading Elizabeth Warren’s Two Income Trap. The book examines families that have filed for bankruptcy in the early 2000’s. She says that the #1 predictor of going bankrupt in the US is having a child and that more children in this country will experience bankruptcy than will experience the divorce of their parents or the death of someone close to them of either heart disease or cancer. She says that American middle-class families are loosing their safety nets of savings, affordable insurance and the controversial reserve worker. She says that over consumption among these families is a myth and that the average family has less than two months of expenses in the bank at any given time. She points to financial concerns as a major contributing factor to suicide, depression, spousal/child abuse, and a host of other societal ills.

    If what she says is true, then the time to fight against these things is while you’re young. Your savings at the age of 22 can function as a safety net when you lose your job at 33 and you have to pay the mortgage. If worse comes to worse, you can cash out the investments you made at 23 to pay for a life saving surgery your kid needs when you’re in your forties. By being financially smart now, you’re building safety nets for later and giving yourself a sense of security and peace of mind that may eventually make you a better person and prolong your life.

    And I’m glad Ramit doesn’t sound like Steve Pavlina. Ick.

  25. Roy

    Sunil is a sour grapes kind of dude. He doesn’t like to hear financial responsibility and equates it to “old stick in the mud” rhetoric. Oh well, his loss.

  26. Andrew

    What amazes me is the fact the Rule of 72 was first “thought of” by Benjamin Franklin, yet it is not taught at schools.

    My father is a retired banker, and I was talking to him about the rule – last year sometime. His response was “Oh yeah, we used that in the bank all the time”.

    I said to him, (slightly peeved) that I wish he had taught it to me 20 odd years ago, when I was first starting to save money and be more financially aware. I was not a happy person with him for a while.

  27. Andy

    Ramit is one of the least arrogant financial advisors that I’ve seen on the web, which is why I like this site. It’s advice like “Save a little of your money when you’re 20. You might want it when your 30 or 50 or 80 or 110” that more people need to follow.

    Still, some of these posts seem pointless. I mean, who’s calculating their finances on the back of a napkin? Is it so hard to work out $20/hr * 40 hr/week * 52 weeks/yr? People don’t like to use the compound interest formula?

  28. Carlin

    Don’t hate the player. Hate the game man. Hate the game…

  29. Richie

    I liked your ideas Ramit.If you have anymore bright ones, please let us all know.For the rest of the sourpuss kinds:If you cant see this as wisdom or even as a kinda help,browse some other page on kids cartoons.Real life IS more serious than meets the eye.Ramit is not asking you to retreat to a cave and just worry about money.But when you do think of managing your money, maybe this will come to your mind.

  30. James

    These are sound principles.

    I have been practicing them for 15 years and can use myself as an example. I’ve never made more than a school teacher but I’ve been pretty diligent about saving as I went along. About a month ago my net worth passed $1 million. I say that not to brag, but to tell you that you can have all that you want and with some discipline you can achieve peace of mind knowing that you don’t have to rely on someone else to take care of you.

    It ain’t ‘easy’ as in winning the lottery, but looking back it wasn’t hard, either

    I’ve learned to be disciplined in my spending and still have a good time in life.

    Here’s what I would add to the list:

    – Insurance. It gets a bad rap, but as your wealth grows you owe it to yourself to protect it. So get a decent life policy (more as your famliy grows); get disabilty insurance so that if you’re disabled you can live the rest of your life with some dignity and security; liability insurance seems odd, but again you are thinking big and of the future, don’t let someone make off with your wealth if you have an accident. A $1 million umbrella policy costs about $100/year

    – a will. Don’t burden others if you get hit by a bus. Be smart and they’ll love you even more

    – Diversify. A good rule of thumb is to buy mutual funds and bonds in a variety of risk categories. Take your age and subtract it from 100. That’s a good starting ratio for your mix of stocks and bonds, thus if you are 20 years old, you’d have 80% of your portfolio in stocks

    – Buy regularly. The best method is dollar-cost-averaging which is a fancy way of saying ‘always buying the same amount no matter what’. It’s as easy as setting up an automatic withdrawl from your paycheck or bank account. The reason that it works is that you’re always buying, and when the market is down (ie. when you’d naturally be afraid to buy) your auto withdrawl makes the purchase for you– and guess what? You actually got more for your money than you did last month when the market was ‘up’. Think about it.

    – Always, always always put the maximum into your 401k that is matched by your employer. It’s FREE MONEY!

    A couple of additional thoughts. When I was getting started there was a book called The Wealthy Barber. You can get it used on eBay for $5. It is about 50 pages and it has informed my investing strategy since day one. Trust me on that.

    Finally, take an interest in your future. Read The Motley Fool. Listen to radio shows where people ask about money, investing, real estate and wealth. Challenge yourself to think about what you hear.

    But if you get one thing from this promise me that you will ignore the FUD (fear, uncertainty and doubt) from the mainstream media media that says anything about investing, the markets, real estate values or ANYTHING about money. They are invariably WRONG and any advice you take from a reporter will be detrimental to your wallet. Why? Because they will present to you that a 200 point loss in the stock market is bad when the opposite is demonstrably true. If you are buying through dollar cost averaging and are not cashing out tomorrow, a down market is to your advantage. If you are not selling your house, a falling market means nothing to you. If you are buying a house a falling market is a godsend. Get it?

    Now please. Don’t take my word for all of this. Think about it, learn about it and act. The sooner you start – I promise- the sooner you will be able to stop worrying about money.

    Thanks for listening

  31. Alex

    I thought of this while I was half asleep this morning – On the rule of 72 – what if you get a 72% rate of return – it will take you 1 year to double your money? Is this assuming monthly compounding?

  32. frank

    i give ramit major kudos for responding to mr. sunil so politely. a class act for someone who probably “stabbed himself in the eye with a katana” when he read the comment. :oP :o)

    “It’ll be interesting to see if you have the guts to post a comment that offers an opinion differing to yours”
    uhhh… yes… it definitely *would* be interesting to see *anyone* post a comment that offers an opinion differing from their own… being that most people post their own opinions… especially as a *response* to an opposing opinion.

    sunil, i would be interested in your thoughts on enjoying life. i look forward to visiting iwillteachyoutobehappy.com . otherwise, you may want to try iwillteachyoutonotcriticizebasedoncompleteassumptions.com

  33. local shopper gordon

    I love your informaiton about how to be rich. i also enjoy your web2.0 logo.

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    […] 2 cool tricks to use: Your hourly rate and The Rule of 72 (tags: 72rule money savings investing finance) […]

  35. Craig Vidler | Weblog » links for 2007-03-14

    […] I Will Teach You To Be Rich » 2 cool tricks to use: Your hourly rate and The Rule of 72 Mental arithmetic shortcuts (tags: money finance maths) […]

  36. Chris

    I can not seem to get that first one to come out correctly. $19/hr x 2 = 38 so 38000. Assuming a 40 hr work week @ $19/hr = 36480/ year. Did I make a mistake?

  37. Kevin Hoang Le

    On my first day of my first job right after college, I learned your trick #1 from an HR staff at my first company, and have never forgotten since. You made a mistake by menitioning about taxes in the last sentence of trick#1. It’s not the taxes. You pay the same the amount of taxes in either cases because you would be in the same tax bracket.

    Just to clarify to some readers, that trick #1 is only an approximate. The reason for the approximate is most of us work 40 hours/week, about 50 weeks/year. Most start with 2 weeks vacation/year. Thus, most of us work 2000 hours/year.

    Again, this is ONLY an approximate because as we gain seniority or re-negotiate, we get more vacation.

    Don’t use that formula to compare between a consultant/contractor who bill hourly rate vs a fulltime permanent employee. Reason is simple: health, insurance benefits, 401K etc.

  38. I Will Teach You To Be Rich » The iwillteachyoutoberich posse comes out

    […] out comments #9 and #10, then the responses from other iwillteachyoutoberich readers. Thanks, […]

  39. chris

    In response to the rule of 72 comment, and the person who asked if it would take 1 year to double your money assuming a 72% return, the rule of 72 provides a pretty close estimate to how much time it takes to double your money. So it’s not an exact measure. One of the caveats is that it only works for more “realistic” numbers, if you want to call them that, but basically once you get into pretty high rates of return the estimate stops being quite so accurate. If you want an exact formula, divide the natural log of 2 by the natural log of (1+ the rate of return in mind). So assuming a return of 10%, compute ln(2)/ln(1.10). Just plug it in on your calculator…

  40. From Bitch to Bull

    Geaux Tigers !

    Geaux Ramit !

  41. Growing a Business » Blog Archive » What is your salary?

    […] Ramit Sethi is great. He has a handy tool for freelancers or hourly workers: To Figure out how much your hourly rate translates into per year, or how much you make per hour from your annual salary. […]

  42. Enrique

    Sunil:
    You got the attention you were craving. It is time to move on.
    If someone is interested in calculating the compound interested with taxes and inflation, cnn has a calculator.
    1)Go to cnn.com
    2)Press on Business section
    3)Press on REAL ESTATE
    4)You will see calculators
    5)Choose the one that says about compounding.
    Enrique
    [email protected]

  43. pfodyssey

    I think everyone understands / appreciates the underlying message Sunil is trying to communicate (another version of smell the roses?). Unfortunately, it’s drowned in his personal, vitrolic posting. Although a newer reader to this site, I appreciate the content being made available from all the contributors (Ramit and readers alike). Whether we all agree with the various suggestions / recommendaion is irrelevant…it’s the discussion / thinking that counts. Sunil has added his own perspective to that…perhaps just not in the most effective way (if he wants to be heard). Onward!

  44. jag - whyyouarenotrich.com

    Thanks Enrique for posting the compound calculator.

    I cannot find it in cnn.com. May be they have removed it.

    I found one here
    http://moneychimp.com/calculator/compound_interest_calculator.htm

    Anyway thanks for your posting

  45. Milind

    Sunil,

    After reading your comment, I was overcome by emotion so overwhelming that it compelled me to write to you.

    I would bet $25 that, like many Indians and Indian Americans, you were raised by extremely frugal parents. They frequently denied you “splurging” experiences that were enjoyed by your friends and many others around you. They trained you to deny yourself such experiences. This left you with resentment and regret so deep that the bitterness has utterly blinded you to the following:

    • The financial difficulties your parents likely went through or observed, to learn frugality.

    • The likelihood that it was a conscious choice on your parents’ part to teach you, from a young age, to deny yourself “splurging” experiences

    • The numerous financial catastrophes you avoided by practicing frugality, catastrophes that are worth some resentment and regret to avoid

    • The critical role played by frugality in your amassing your own wealth

    • The long-term financial difficulties faced by those who habitually enjoyed “splurging” experiences from a young age

    • The tragic absence of education to help young people make wise personal finance decisions.

    • The excellent personal finance education, geared toward young people, provided by Ramit in his speaking engagements, newsletter, and blog.

    • The deeply informed reasons Ramit provides for frugal habits.

    • The distinction Ramit repeatedly draws between financial net worth and “being rich”

    • The numerous examples Ramit provides of people who may look like they are splurging but who are actually making informed investments in their own happiness.

    • Ramit’s commitment to using his assets to help others.

    • The good humor with which Ramit pokes fun at examples of excessive frugality.

    Your blindness to these obvious facts suggests that you are overwhelmed by resentment and regret. In Ramit, you see only your own deficiencies. For this, I pity you.

    Here is a prescription to rid yourself of these demons:

    • Accept that some experiences are lost forever, and move on. To help you, think of people who had even fewer good experiences than you.

    • Enjoy splurging experiences that were denied you at a young age. Buy the biggest ice cream sundae on the menu, or buy the most expensive Disney World experience. You will find yourself rapidly and cheaply satisfied.

    • Treat some one else to such experiences.

    • Fund an enterprise that helps others by providing wealth, employment, education, or financial aid.

    You will find yourself liberated and spiritually enriched by the practices of the very person you deride. Unlike you, I wish Ramit continued success in his ventures. May his wealth surpass our own when he reaches our age.

  46. nomes

    Sunil is an ass. Since reading Ramit’s blog I have amassed £15000 in pure savings with my only debts now being my mortgage and student loan. IA hearty thanks from me Ramit.

  47. Maxim

    it’s a neat trick, but breaks down at later periods. if you were to compound $1000 at 10% [1000(1.1^63)] = $405k, not the $512k indicated by this trick – a significant. it’s easy, but the “proper” way only takes a simple calculator. heck, i did it on my cell phone 🙂

  48. links for 2007-03-18 « My Weblog

    […] I Will Teach You To Be Rich » 2 cool tricks to use: Your hourly rate and The Rule of 72 (tags: money Finance tips investing lifehacks advice career howto) […]

  49. 2 cool tricks to use: Your hourly rate and The Rule of 72 « a Cisco day in the ‘cisco bay

    […] a couple of “cool” personal finance tricks I saw at / (they got a bunch of cool personal finance tips there): 1. Figure out how much your hourly rate […]

  50. I Will Teach You To Be Rich » I should be a personal-finance carnie

    […] So, in the spirit of being overly competitive with small amounts of information, I decided to try to guess the difference between her income and the amount her firm bills her out at. For example, if her salary comes out to $25/hour and her firm bills her out at $100/hour, the answer would be 4x. (How to calculate your hourly wage from your annual salary.) […]

  51. Technical Related Notes » Blog Archive » links for 2007-03-15

    […] I Will Teach You To Be Rich » 2 cool tricks to use: Your hourly rate and The Rule of 72 72/[return rate you’re getting] = # of years to double your money. (tags: finance Money) […]

  52. Holla Back

    I love Sunil…he is my idol…that shit is true wat he says….fuck the free world…spend all the money in the world

  53. Mind Your Decisions Blog » Blog Archive » How Quickly Will Your Money Grow? The Rule of 72, and Caveats for Sophisticated Investors

    […] Ramit Sethi of IWillTeachYouToBeRich explains the rule of 72 is a cool trick to see how fast your money will grow […]

  54. Taylor Hill

    Thanks for helping to educate ordinary folks like me as to how to better manage and put to work the financial resources that we already have access to (without having to be day-dreaming about winning the lottery the rest of our days on earth)!

  55. What FF Readers Think About a High School Money Course | Foreigner's Finances

    […] your basic curriculum the most important rule of all after learning how to balance that checkbook. The Rule of 72! It is a very versatile tool that I use quite often to help me make quick estimates on […]

  56. Bob Donaldson

    Ramit !!!!

    Thank you sooo fucking much for this…..

    I do pretty good right now, I'm 60, pulling in about 300/350k a year. and I'm just now releasing an on line leadership training program that's a bit different than most you see…..I employ 4 of our six kids, and my grand babies enjoy the company of the their mothers because my daughters work from home…

    My family and friends consider me quite the success…why you might ask what is my scent of success?

    I was never paid an "allowance."

    We had a big family and when I went to school I learned that other kids got free money or money doing chores, chores i was doing already. I thought wow awesome. When I talked with my Dad he told me that he knows about kids getting allowances and then proceeded to inform me thats not what we do in this house.

    If you want money you will have to go earn it……and thats what I did …starting at 6, for a lifetime….. mowing lawns, yard work, newspaper route for 6 years building up a route nobody wanted, my first failed business at 12…..

    later I ended up a full time single dad with three daughters while managing a 24 department at the same time..

    ..did they get "allowances" – nope. they got jobs…..

    now in there early 30s with their own kids and they all kick ass…all with degrees, a bachelors and masters and a phD thrown in there ….

    bottomline: they know how to be effective in the world in which they operate…..because while they received unconditional love for free everything else had to be "earned"

    you know the joe DiMaggio story? :

    As the story goes, a journalist was interviewing DiMaggio at his home and asked him what it felt like to be such a “natural hitter.” Without saying a word, he dragged the reporter downstairs. In the shadows of the basement, DiMaggio picked up a bat and began to repeat a series of practice swings. Before each swing, he would call out a particular pitch such as “fastball, low and away” or “slider, inside” and adjust his approach accordingly.
    Once he finished the routine, DiMaggio set the bat down, picked up a piece of chalk, and scratched a tally mark on the wall. Then he flicked on the lights to reveal thousands of tally marks covering the basement walls. Supposedly, DiMaggio then looked at the journalist and said, “Don't you ever tell me that I'm a natural hitter again.”

    Take good care !!

    Bob